You are here

Don't Coin This Currency

But this year, according to the Federal Reserve, the entire budget for printing all U.S. currency is $578.5 million. So unless Geerdes is actually advocating the elimination of the nation's entire monetary system, it's safe to say that his figure came out of thin air.

[BSN: Money]

The ever-rising price tag of the Wall Street bailout has induced an understandable uproar from the American public.

Taxpayers are right to be concerned about Congress doling out such a sizeable chunk of change -- and skeptical of the justifications proffered by politicians.

But all too often, at the behest of well-connected special interests, lawmakers are able to sneak hugely expensive projects right past voters. In just the past couple of years, Congress has appropriate $1.2 million to study the breeding habits of woodchucks and $2 million to build an ancient Hawaiian canoe.

And right now, at the behest of powerful lobbyists, lawmakers have embarked upon another misadventure with millions of taxpayer dollars -- they're attempting to convince us that we should replace the dollar bill with a dollar coin.

Last year, the U.S. Mint unveiled the Presidential Dollar Coin Series, pledging to introduce four new coins every year. So far the coins haven't caught on -- a Harris Interactive poll from March found that a whopping 76 percent of Americans prefer a dollar bill to a coin. But production of the coins continues.

The groups pushing for the series include metal producers and the National Automatic Merchandising Association (NAMA), which represents vending machine manufacturers.

NAMA's members expect their operational costs to drop dramatically if dollar coins are the norm. Since coins tend to take up less room inside machines than bills, collection personnel can make fewer stops at vending sites. The metal industry's interest in the coins is obvious.

In making their case, the groups have decided that their best move is to try and convince lawmakers that taxpayers will save money if the government produces coins instead of bills. Problem is, their case blatantly misrepresents the facts.

At a July hearing held by the House Financial Services subcommittee, NAMA president Richard Geerdes claimed that a switch to dollar coins would save "the American taxpayers at least $600 million a year."

But this year, according to the Federal Reserve, the entire budget for printing all U.S. currency is $578.5 million. So unless Geerdes is actually advocating the elimination of the nation's entire monetary system, it's safe to say that his figure came out of thin air.

But wait -- don't coins last longer than paper notes? Won't they therefore save at least some money? Not really. For starters, the lifespan of the average bill increased from 18 to 22 months over the past eight years -- and that figure continues upwards. As the disparity between how long a coin lasts and how long a bill lasts decreases, cost savings drop.

Also, the cost of producing coins has been skyrocketing. The penny now costs 1.9 cents to produce, and the nickel 9.8 cents. The cost of producing a dollar coin has doubled in the last decade.

Finally, according to both the Congressional Budget Office and Federal Reserve, it actually takes at least two coins to replace one paper bill. Coins are more likely to get dropped from circulation by individual consumers than are bills. Think of all the coins rattling around that jar on your dresser or underneath the cushions of your couch.

As a 1993 survey from the GAO noted, people "consider coins heavier to carry than notes, as well as bulky and awkward." No kidding.

Despite these realities, the government is burning through millions on the dollar coin program. Between 1998 and 2001, the Feds spent $67 million promoting the Sacagawea dollar -- ultimately to no avail. A 2001 GAO study found that the Sacagawea dollar was being used in less than 1 percent of all dollar transactions.

The pro-coin lobbying push is not only bad for taxpayers; it also undermines the interests of the vending-machine operators NAMA claims to represent. Today, more Americans are using credit cards than ever before. Instead of pushing for dollar coins, NAMA should be encouraging its members to invest in technology to allow credit card purchases at vending machines.

Time and again, Americans have indicated that they just don't want to use dollar coins. Yet at the behest of special interests, the federal government persists in spending millions trying to convince us that we should.

This campaign for change is costing taxpayers dearly. It's time for lawmakers to use a little common sense and say, "no thanks" to the dollar coin.

Richard Miniter is a bestselling author and fellow at the Hudson Institute.